Take-over talk targets Newbridge

Latest fall in share price prompts increased speculation

Newbridge Networks could become the target of a take-over bid in the wake of its falling share price and multiple profit warnings. There have been five profit warnings from Newbridge in the last eight financial quarters and its share price dropped to $28 7/8 this week, according to a report in the Financial Times. The lower share price, coupled with the company’s position in the market could make it attractive to a number of companies in the networking and telecomms sectors, sources have said. Manny Pinon, sales and marketing manager of Newbridge distributor Norwood Adam, said Newbridge was always likely to be a target, but doubted whether any potential take-over bids would ever succeed. “It’s not quite big enough to fend off all potential challenges and because of its strength in key markets, it will always attract this sort of attention. Companies like Cisco, Siemens and Lucent spring to mind as maybe being interested.” But anyone wanting to buy Newbridge would need to have deep pockets or an understanding banker, Pinon said. “Terry Matthews (Newbridge’s CEO and majority shareholder) would have to be bought out for any acquisition to go through. He’s going to be looking for a substantial payout.” Matthews is reputedly the wealthiest man in the IT industry. “He doesn’t need to sell and he still takes a very active interest in the business,” Pinon said. “I don’t think the market has really taken that into consideration. Yes the share price has fallen but a take-over of Newbridge wouldn’t necessarily be that straightforward.” Other speculation from sources close to Newbridge, suggests that the company will see out another full financial year before considering putting itself up for sale. “The European channel could probably have shifted 25 per cent more Newbridge product in the last quarter of last year,” the source said. “They’ve had a tough year, admittedly, but there’s been a lot of changes and I think there’ll be a real push this year to put things straight.” ®

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